Jury Fails to Determine Validity of Yahoo! Ad Tech Patent

The patent dispute over bid-for-placement technology between Yahoo Search Marketing and FindWhat.com resulted in a mistrial late Wednesday. Parts of the case could still be decided by a judge next month.

A jury was unable to reach a verdict after deliberating since Friday in the U.S. District Court trial in California. The jury did find that FindWhat infringed on 18 claims within the patent held by Yahoo Search Marketing (formerly Overture). They also found that FindWhat had proven six of those claims invalid during the trial, but they were unable to reach a decision on the 12 other claims.

“We are pleased to learn the jury has determined that FindWhat infringed on all of the patent claims that were before the jury and at issue in the trial,” a Yahoo spokesperson said. “It is unfortunate that the jury did not reach conclusion on the remaining issues. We look forward to resolving all remaining issues in the post-trial briefing that has been scheduled by the Court.”

FindWhat’s argument all along has been that the patent itself is invalid based on “inequitable conduct” by Yahoo, meaning they did not file the paperwork correctly, or did not communicate properly with the patent office when the patent was filed.

“We continue to believe that FindWhat.com has never infringed any valid and enforceable claim of the ‘361 patent,” said Craig Pisaris-Henderson, FindWhat.com’s chairman and CEO.

Judge Cormac J. Carney has scheduled a hearing for June 24, 2005. At that time, he may rule on the issue of inequitable conduct, and he could potentially enter the parts of the jury’s verdict where a decision was reached into the record, though he is not required to do so. The judge will not have a set time limit to make his decision, but he has generally tried to keep the trial moving quickly.

The jury found invalid two of the main claims in the patent describing the overall method of selling bid-for-placement search ads. If the judge accepts the jury’s decisions on those two claims, FindWhat, and the industry in general, will score a big win. Most of the remaining issues relate to lesser issues that could force FindWhat and others to alter the way they do business without changing it completely.

“The up-side of inequitable conduct is good for the company and the industry,” Pisaris-Henderson said. “The down-side is basically a neutral, as it has no effect on the way we do business.”

Overture, now Yahoo Search Marketing, filed the lawsuit in January 2002. The trial began last month after the judge denied FindWhat’s attempts to have the case dismissed.

The dispute centers around the bid-for-placement business model and technology used by both Yahoo’s Overture division and FindWhat. In July 2001, Overture was granted U.S. Patent No. 6,269,361, “System and method for influencing a position on a search result list generated by a computer network search engine.” Yahoo claims the patent protects its bid-for-placement products and another patent it holds protects its account management tools.

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